Correlation Between Astoria Investments and Nedbank

Can any of the company-specific risk be diversified away by investing in both Astoria Investments and Nedbank at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Astoria Investments and Nedbank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astoria Investments and Nedbank Group, you can compare the effects of market volatilities on Astoria Investments and Nedbank and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Astoria Investments with a short position of Nedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astoria Investments and Nedbank.

Diversification Opportunities for Astoria Investments and Nedbank

0.15

Correlation Coefficient

Astoria Investments  Nedbank

Average diversification

The 3 months correlation between Astoria and Nedbank is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Astoria Investments and Nedbank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nedbank Group and Astoria Investments is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Astoria Investments are associated (or correlated) with Nedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nedbank Group has no effect on the direction of Astoria Investments i.e., Astoria Investments and Nedbank go up and down completely randomly.

Pair Corralation between Astoria Investments and Nedbank

Assuming the 90 days trading horizon Astoria Investments is expected to generate 0.9 times more return on investment than Nedbank. However, Astoria Investments is 1.11 times less risky than Nedbank. It trades about -0.11 of its potential returns per unit of risk. Nedbank Group is currently generating about -0.11 per unit of risk. If you would invest  85,000  in Astoria Investments on October 5, 2024 and sell it today you would lose (2,500) from holding Astoria Investments or give up 2.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Astoria Investments  vs.  Nedbank Group

Astoria Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astoria Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Astoria Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Nedbank Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nedbank Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Nedbank is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Astoria Investments and Nedbank

The main advantage of trading using opposite Astoria Investments and Nedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astoria Investments position performs unexpectedly, Nedbank can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nedbank will offset losses from the drop in Nedbank's long position.

The idea behind Astoria Investments and Nedbank Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.